Jun 16, 2018

Weekly preview

Short term view - another high then down next week.
Intermediate term view - up and down for several weeks and 20 week cycle low in July.

Boring sideway week... technically nothing has changed and we have the same patterns like last week. The bulls see wave 3 just warming up for strong rally, the bears see finishing 2 and big sell off around the corner. The problem is I do not really like any pattern. Something does not feel right I see a-b-c finished early April. When I look at cycles and market breadth I think it should be something else. This week I am showing different pattern which fits very good - impulse after finished a-b-c for wave IV, cycles are ok with it, it explains the market breadth strength and the expected weakness, it is in sync with NDX/RUT, it explains why the index is sold on strength all the way up(big boys are unloading already). The only problem I see is you have to assume that the move in April is wave 1 and not some corrective crap.

So if this is the pattern what should happen - sideway move for 3-5 weeks with one more high to finish wave 3 then wave 4 with 20 week cycle low second half of July. In the mean time market breadth should deteriorate rapidly(this is the crucial part). Then July-August final rally with poor market breadth and new ATH 2900+ to trap the herd.


TECHNICAL PICTURE and ELLIOTT WAVES
Short term - one more wave up to finish impulse from the last low. This will kill the diagonal(see previous week) and we will have only the very bullish or very bearish scenario.... or the alternate one which I am suggesting:)


Intermediate term - the a-b-c is not so obvious masked with higher low, but if you look at NDX/XBI for example it is very well visible as a flat. The caveat is this some ugly wedge for wave 1 in April or is it just some corrective crap.
I am watching now this scenario and alternate is wave B/X and another sell off begins. As long as the index stays above 2740 it is bullish, if price starts overlapping forget about impulses.


Long term - MA 50 tested twice, I think this should be wave 4 and this is the last rally. Waiting to see if this is wave V - it looks good with divergences.


MARKET BREADTH INDICATORS
The previous week I have explained about cycles and now my problem with the bullish/bearish scenario and market breadth.
McClellan Summation index - the usual behavior is after important low we see sharp move to 1000-1200 deep correction then highs in the range 800-900. Currently the indicator reached 750 and the third wave has not even really started... in this case we will see 1000 and above, which does not make sense. This should be the final wave and important top showing weakness not extraordinary strength. On the other hand 750 is sign for a strength, important tops occur usually at lower levels 500-600 with divergences. The bearish case does not make sense either.
So neither very bullish nor very bearish scenario fit very well... the same story with A/D issues.
What could it be? Corrective move not so much visible as price, but market breadth dropping heavily(this will confirm money flow and selling on strength). Then final rally on poor market breadth and divergences. This will be classical top - topping for 6 months, distribution on the way up and final rally with poor market breadth and indicators to trap the herd.

McClellan Oscillator - dropped to the zero line after several lower highs.
McClellan Summation Index - buy signal.
Weekly Stochastic of the Summation Index - buy signal, in overbought territory for several weeks.
Bullish Percentage - buy signal... but not showing much strength so far.
Percent of Stocks above MA50 - touched overbought level.
Fear Indicator VIX - around 12 I doubt wave 3 is just starting.
Advance-Decline Issues - several highs in overbought territory and now turned lower.


HURST CYCLES
Day 13 for the 40 day cycle. Mid cycle low with wave iv of 3 and 20 week cycle low with wave 4?


Week 10 for the 20 week cycle.


Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
Finished sell setup on the daily and weekly chart, now waiting to see what happens to the downside.

40 comments:

  1. Hi Krasi

    Thanks for your excellent work
    Is there an email address where I can post a chart of an S&P count for you to look at?

    Cheers

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  2. There is many pages where you can upload images.
    For example https://imgur.com/upload just drag and drop the image and copy the URL.

    ReplyDelete
  3. OK thanks. Try this

    https://imgur.com/a/1sonhYk

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    Replies
    1. Wave d takes more time than a b and c all together.... I doubt it is a triangle. More likely a different wave is running from the April low.

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    2. Thanks. Possibly a B from the April low then. Looks like a wave down is coming soon in any event

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  4. Is the green count on your Intermediate Chart your preferred or expected path? Thanks

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    Replies
    1. Both as long as the price stays above 2740.

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  5. Hi Krasi, what’s your thought on Gold and silver after Friday decline?

    Thanks

    Neel

    ReplyDelete
    Replies
    1. Nothing interesting.... USD is finishing the move up, PM should make a low.

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  6. So based on the current situation, do you think we will have one wave up in short term?

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    Replies
    1. Yes, I expect one more high even in the bearish case.

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    2. krasi what do you think about buying dip today

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    3. I do not know the pattern so I do not know if it is buy the dip or not.

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  7. so boring market... Can you help update the status? Thanks.

    ReplyDelete
    Replies
    1. Now we have more action:) which does not help at all.... nothing changed I can only guess so it is useless to post charts.

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    2. yes it looks like still bullish. Any target or potential wave count? Thanks.

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    3. Probably one more high 2800-2820 for intermediate term top....

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  8. Hi Krasi! What are your thoughts on USD INR and Nifty index? Thank you for all the work! Appreciate it :)

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    Replies
    1. NIFTY wave c lower to finish correction, USD INR is finishing the move from the low early 2018 and should move lower.

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  9. Hi, Krasi, what do you think about recent continuous jump down but all green/positive candles?? Thanks. Really strange...

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    Replies
    1. Distribution is running. I wrote that the rally was sold all the way up. When the big boys are ready with unloading, they will just let it fall.

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    2. So currently we are having another wave up to finish the top? It appears xbi/QQQ/iwm sectors are very strong but other sections are weak...

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    3. xbi/QQQ/iwm should be finishing wave 3 from the early April low so one more pullback and high for major top.
      The major indexes are in some corrective wave and I doubt they will make higher high.

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  10. Krasi, again, thanks for all the good work. Do you see the possibility of a 5th Wave Failure ?

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    Replies
    1. It is not clear if we have an impulse in the first place.... I do not think it is fifth wave failure.

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  11. Nasdaq moves higher while dow reaches bottom... Does Nasdaq moves faster or slower? I mean which will reach top first? Thanks.

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    Replies
    1. NDX is making a top - wave 3 from the April low. DJ is in some corrective wave and it is possible that it turned lower already....

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  12. Hi Krasi, What wave do you figure RUT is in? I am just guessing same as NDX 'making a top - wave 3', but isn't wave 5 the top? just trying to make sure I understand. Thank you for your work!

    ReplyDelete
    Replies
    1. Just a top for wave 3 and a pullback and THE top is wave 5.
      Looking at the the indicators and the pattern I would say indexes like NDX/RUT/XBI should be finishing wave 3 and wave 4 should begin.

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  13. can't help but feel like RUT is acting same like SPX in last 2years (buy the intraday dip)....and now parabolic...just like SPX in January for ending.

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    Replies
    1. Everybody chasing the momentum RUT and a few tech stocks.... it will end like in January. It is always the same.

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  14. Hi Krasi, what is the possibility that SPX is finishing a multi-month top building? Banking stocks are behaving weirdly despite good fundamental "stories". Thanks

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    Replies
    1. The probability is very high. I have mentioned many times that probably we saw the top.

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  15. If we're looking at topping for wave 3, wouldn't wave 5 set up nicely for a double top with the January ATH?

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    Replies
    1. This count is for NDX I doubt SPX will make higher high more likely is that we have just a corrective move and the next bigger move is lower.

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    2. It seems for NDX QQQ we may still have some final wave 5 and spx would make some wave 2 up or wave 5 depending on how to count? Thanks.

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    3. I do not know the pattern for SPX. I do not know how exactly it will play out with lower or higher high, but for SPX/DJ the strong move lower should come when NDX/RUT are finished with their top.

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    4. How about USOIL? another test to previous high or? it seems XLE is finishing wave 2 up and ready for wave 3 down along with SPX? Thanks.

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  16. dropping down today makes it more bullish we should get up to 2784 in my opinion

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